2015-10-21

Sinosteel Co. failed to pay interest due Tuesday on 2 billion yuan ($315 million) of 5.3 percent notes maturing in 2017 after saying it will extend the deadline as it plans to add a unit’s stock as collateral. That came after the National Development and Reform Commission planned to meet noteholders and ask them not to exercise a redemption option on Tuesday to force full repayment, people familiar with the matter said last week.
Chinese authorities are weeding out weak state firms that Premier Li Keqiang called zombies.

...Sinosteel’s failure to pay interest on time constitutes a default, according to Industrial Securities Co., Haitong Securities Co. and China Merchants Securities Co. China Bond Rating Co. said in a report Wednesday if Sinosteel bond investors had agreed to the delay of interest payment, it didn’t constitute a default, whereas if they hadn’t, it did. Sinosteel hasn’t said in its statements whether it got permission from investors, and two calls to the company Wednesday went unanswered.

China Bond Information Network data show that in steel shares on October 20, 2010 released the 2010 China Steel Co., Ltd. Corporate Bonds (the "10 Steel Bonds"), provided by the parent company Sinosteel unconditional and irrevocable joint and several responsibility to ensure security.

In this case, the investors were the ones who threw away the guarantee by not accepting a delay.